Can I Sell Products on Amazon Without GST?

Selling products on Amazon has become a lucrative venture for many entrepreneurs and small business owners. However, when it comes to selling on Amazon in India, one question that frequently arises is whether it's possible to sell products without having a Goods and Services Tax (GST) number. Understanding the intricacies of GST regulations and how they apply to Amazon sellers is crucial for anyone looking to establish a business on this platform.

What is GST?

GST stands for Goods and Services Tax, a comprehensive indirect tax that was introduced in India on July 1, 2017. It is levied on the supply of goods and services, replacing multiple cascading taxes previously levied by the central and state governments. For sellers on Amazon India, GST is particularly relevant because it directly affects the pricing, profitability, and legal compliance of their operations.

Is GST Mandatory for Selling on Amazon?

In general, GST registration is mandatory for businesses with a turnover exceeding INR 40 lakhs (INR 20 lakhs for special category states) per annum. However, for e-commerce sellers on platforms like Amazon, GST registration is required regardless of turnover. This is due to the nature of online sales, where goods are sold across state borders, triggering the requirement for inter-state supply under GST regulations.

Selling on Amazon Without GST: Is it Possible?

Technically, it is not possible to sell products on Amazon India without a GST number if you are selling taxable goods. Amazon requires all sellers to provide a GST number during the registration process. However, there are some exceptions and workarounds to this rule:

1. Selling GST-Exempt Products: If you are selling products that are exempt from GST, such as unprocessed agricultural products, educational materials, or other goods not covered under GST, you may not need a GST number. In such cases, you will need to provide proof that your products are exempt during the Amazon registration process.

2. Composition Scheme: Small businesses with a turnover of up to INR 1.5 crore can opt for the GST Composition Scheme. This allows you to pay GST at a fixed rate of turnover instead of the regular rate. However, businesses under the composition scheme cannot engage in inter-state sales, which makes this option non-viable for most Amazon sellers.

3. Registering as an Individual: Some sellers attempt to register as individual sellers without a GST number by categorizing themselves as hobbyists or casual sellers. However, this approach has significant limitations, including restrictions on product categories, sales volume, and the inability to scale the business effectively.

Consequences of Not Having a GST Number

Selling on Amazon without a GST number (when required) can lead to several issues:

• Account Suspension: Amazon regularly audits seller accounts. If you are found selling taxable goods without a GST number, your account could be suspended.
• Penalties: Selling without proper GST compliance can result in legal penalties, including fines and back taxes.
• Limited Access: Without a GST number, you cannot access certain Amazon seller services, such as Fulfillment by Amazon (FBA), which can significantly impact your sales and customer satisfaction.

How to Get a GST Number?

Obtaining a GST number is relatively straightforward. The process involves:

1. Online Registration: You can apply for GST registration online through the GST portal (www.gst.gov.in). You'll need to provide details like PAN, Aadhaar, business address, and bank account information.

2. Verification: Once the application is submitted, it goes through a verification process. If everything is in order, you'll receive your GSTIN (GST Identification Number) within a few days.

3. Filing Returns: After registration, you'll need to file regular GST returns, even if your turnover is below the threshold or if you have no sales in a particular period.

Advantages of Having a GST Number as an Amazon Seller

Having a GST number provides several benefits for Amazon sellers:

• Input Tax Credit: You can claim input tax credit for the GST paid on business-related purchases, reducing your overall tax liability.
• Increased Credibility: A GST-registered business is more credible in the eyes of customers and suppliers, which can lead to better business opportunities.
• Access to Wider Market: With GST registration, you can sell across India, accessing a much larger customer base.

Alternatives to Selling Without GST

If you are adamant about not obtaining a GST number, you might consider the following alternatives:

1. Selling on Platforms That Don’t Require GST: Some local or smaller e-commerce platforms might not require GST registration, especially for sellers dealing in GST-exempt goods.

2. Offline Sales: You could focus on selling products offline, where GST registration might not be mandatory depending on your turnover and state regulations.

3. Partnering with a GST-Registered Entity: Another approach could be to partner with or sell through a GST-registered entity, allowing you to leverage their compliance for your online sales.

Conclusion

While it might be tempting to sell on Amazon without a GST number, the challenges and risks often outweigh the potential benefits. GST compliance not only keeps you on the right side of the law but also opens up more opportunities for your business to grow and succeed on the Amazon platform. If you're serious about building a sustainable and scalable online business, obtaining a GST number should be seen as an investment rather than a burden.